The Strait of Hormuz, through which a fifth of the world's oil passes, is back in the headlines, not for another tanker seizure, but for Iran's plan to charge a toll on every vessel that transits what Tehran calls its sovereign waters. The warning came as Donald Trump threatened Tehran with a "very bad time" if Washington's push for a peace deal collapses. The juxtaposition is no accident: Iran is testing the limits of its regional deterrence while the U.S. tries to keep negotiations alive.
The sequence matters. After months of indirect talks brokered by Oman and Pakistan, both sides had appeared to inch toward compromise. Then came the surprise announcement on tolls, a move that looks designed to remind Washington that Tehran still holds leverage in the Gulf. Within hours, Trump's rhetoric sharpened, and Israel raised its military readiness to the highest level in years, citing intelligence that Iran is preparing for a possible strike.
The timing is not coincidental. It echoes the spring of 2019, when Iran began seizing tankers in response to U.S. sanctions that choked off its oil exports. Back then, the Trump administration responded with an aircraft carrier deployment and additional sanctions. Today, the stakes are higher: Iran's nuclear program has advanced, Israel's government is more hawkish under Netanyahu, and Russia has positioned itself as a broker willing to shield Iran from further strikes. The 2019 crisis ended with a de-escalation deal brokered by Iraq and Kuwait, but this time there is no obvious off-ramp. The U.S. exemption on Russian oil expires this week, pushing European buyers toward Middle Eastern crude, and making the Hormuz bottleneck even more vital.
Who's playing what role
Iran's toll plan is a legal gambit as much as a military one. Tehran insists the strait is part of its territorial waters and that fees are standard practice elsewhere, like the Suez Canal. But the U.S. and its allies view it as extortion that could strangle global trade. Israel's readiness level signals it may strike preemptively if it believes Iran is close to deploying a nuclear weapon, or even if it fears a conventional attack from Lebanon's Hezbollah, which launched drone and rocket attacks on Israeli forces this week.
Hezbollah's escalation is the latest in a tit-for-tat cycle that began after Israel killed a senior Hamas commander in Beirut. The group's attacks on Israeli positions in southern Lebanon have continued despite a shaky ceasefire extension, raising fears that the front could ignite into a full-scale conflict. Meanwhile, U.S. Central Command says 78 vessels have been redirected under what it calls an "Iran blockade," though Washington insists the rerouting is voluntary and aimed at avoiding incidents.
Russia, meanwhile, has warned Washington and Tel Aviv against fresh strikes on Iran, a signal that Moscow sees the current tensions as useful leverage against the West. The UK, sensing the danger, has deployed anti-drone systems on RAF aircraft in the Middle East, a move that suggests London is preparing for the possibility of asymmetric attacks.
The global cost of a miscalculation
If the toll plan survives legal challenges, it could set a precedent: other straits like Bab el-Mandeb or Malacca might see similar demands, fragmenting global shipping into a patchwork of national tolls. Oil markets are already jittery. The U.S. exemption on Russian oil, a lifeline for European refiners, expired this week, forcing buyers to scramble for alternatives. With Hormuz traffic accounting for nearly a third of seaborne oil, even a temporary disruption could send prices soaring above $100 a barrel again, as they did in 2022 after Russia's invasion of Ukraine.
Diplomatically, the toll announcement complicates Pakistan's role as a mediator. Islamabad has hosted three rounds of talks between U.S. and Iranian officials, but Iran's move risks sidelining Pakistan's efforts. The country's foreign minister has said a second round of Washington-Tehran talks could still bring peace, but the clock is ticking. If talks fail, Pakistan could face a choice: align more closely with Iran to avoid regional isolation, or double down on its security partnership with the U.S. to counterbalance India's growing influence in the Gulf.
For India, the stakes are different. New Delhi imports about 60% of its oil from the Gulf, and any disruption to Hormuz traffic would force costly rerouting through the Cape of Good Hope. India has already begun diversifying its suppliers, signing long-term deals with Russia and the U.S., but a sudden spike in oil prices could derail its fragile economic recovery. Diplomatically, India has tried to stay neutral, but its growing strategic ties with Israel and the U.S. risk alienating Iran, which has historically been a key supplier of crude and a counterbalance to Gulf Arab states.
The broader South Asian region could face a triple whammy: higher fuel costs, a surge in refugees if Lebanon or Gaza erupts, and a potential security vacuum if U.S. forces redeploy from the Middle East to Asia. Pakistan, already grappling with economic crisis and political instability, would bear the brunt. Its ports in Gwadar and Karachi are already under pressure from Chinese investments, and any conflict in the Gulf would disrupt Chinese supply chains, further straining Islamabad's ties with Beijing. Meanwhile, India's navy would likely be tasked with protecting its own shipping, adding strain to its already stretched resources.
What happens next? Three scenarios stand out. First, the most optimistic: a last-minute deal brokered by Pakistan or Oman, where Iran pauses the toll plan in exchange for sanctions relief. Second, a controlled escalation: limited Israeli strikes on Iranian nuclear sites or Hezbollah positions, followed by Iranian retaliation against Gulf shipping. Third, a full-blown conflict: if Israel launches a preemptive strike on Iran's nuclear facilities, Tehran could close the strait entirely, triggering a global oil shock and drawing in the U.S. directly.
The third scenario, while still unlikely, is no longer unthinkable. The 1973 oil crisis began with a partial embargo and spiraled into war. Today, the region is more fragmented, the weapons more advanced, and the diplomatic channels narrower. The question is not whether Iran will enforce the tolls, but whether the U.S. and Israel will tolerate them, and what they'll do if they don't.
